Nov. 13, 2016
Property Management For Would-Be Landlords
If you're considering owning a Rental home for an additional source of income, then you should automatically picturing yourself as a landlord. Here are some things some experienced landlords may let you know as their advice, just so that you're prepared for when you finally make the decision to establish a given property for lease.
1. Choose Your Tenants Wisely - One field where you absolutely have the power to allow or refuse a tenant application is in the area of their financial capability. Asking about how a tenant intends to pay for his/her rent eventually opens up conversational avenues where you eventually discover other vital pieces of information such as their job, past income, debt/income ratio, and maybe even information on their previous stay. Ask a little more when you come across potential tenants that are self-employed, because you need to make sure that their income is consistent and stable enough to sustain their monthly dues.
Ask all the questions you can. Take all the information you should. What's their credit score like? Who are their references? Go as far as calling their references and asking them questions as well. The more information you know at the offset, the better.
2. Establish A Consistent Cash Flow - The property needs to keep cash flowing, in as much circumstances as it could take. You will need a buffer, a margin of safety. You need to make sure that money keeps coming in, even when the air-conditioning conks out or when the heating system needs repairs. Speaking of repairs, you may find it necessary to have a reserve amount of money for those times. An extra amount of cash also helps to cover expenses in the event of an eviction.
3. Know Your Local Laws - Rental laws don't just vary by state, they may even be different from county to county - remember this if you intend to keep multiple rentals in surrounding areas. You will definitely want to familiarize yourself with the Landlord/Tenant Act for your particular county, understanding all the nuances of it. This may mean that you may need to do upgrades to the home to adhere to the said Act.
4. Be Prepared To Evict - Here's another reason to know what your Local Laws say; events such as Eviction are always covered, and you must know your capabilities as a Landlord according to what the County/State has to say. You should also be ready in other areas; Consult an attorney to help you out by reviewing your Lease Agreement. Ask for what's needed when an actual eviction is necessary; most of this information (Identification i.e. a Driver's License) can be gathered from your tenants before they move in.
If you want rentals, you need to be prepared to evict. It's absolutely part of being a landlord. Keep a strict system and adhere to it.
Other Good Things To Know
Experienced landlords may also tell you to stay close to home - This means that it is always ideal that you are living close to where your rentals are. This is so that you can take a quick drive to check on things, such as working utilities, appliances, etc. It also allows you to keep your tenants on their toes, to make sure they're always complying to the terms you initially agreed upon. It takes a lot of manpower and resources to maintain properties in different counties, much more in different states. You should keep an close eye on your real-estate.
Finally, you may also consider hiring a Property Manager - although if you have the time, you should be your own property manager. Doing the tips above covers most essentials that Property Managers actually do - if you already have consulted with an Attorney regarding evictions (or, if you have an actual 'eviction attorney' ready), and if you screen your tenants wisely, a property manager may just turn out to be a waste of money. Consider the terms and how much they cost.
Owning a Rental home means that you will become a Landlord - and every Landlord would definitely benefit by having a good grasp of Property Management. It is essential that you know exactly what you're getting into, just so that you would be making less mistakes, and more profit.